Historical discussion of period of production theory and economic thinkers

in some cases, to maximize frequency of a histocompatibility gene which is an antidote to the local strain of parasite or pathogen. This idea could complement the Hamilton-Zuc parasite model nicely. It would give a safe home to which both gene and parasite could retreat until their times come again. Period of Production Theory Back to economics. Chapter 4 mentioned John Rae as a contributor to what later developed into Mill’s free growth theory. Rae’s book, published in 1834, also begins what was called period of production theory. The idea was that production took time, and that profit compensated the investor’s patience over the production period. Senior, who had sent Rae’s book to Mill, adopted this idea in his own better- known Outline in 1836. Rae’s book itself found few readers, despite its warm endorsement by Mill in his own magnus opus of 1848. Jevons adopted the idea from Senior in 1871, and Boehm Bawerk from Senior and Jevons in his book of 1889. Boehm Bawerk soon learned of Rae’s work, and dedicated later editions to him. Period of production theory thrives today in the Austrian School, which had been founded by Boehm Bawerk’s teacher Carl Menger in 1871. (Menger was the guy who squabbled with Schmoller in Chapter 2.) It has found little favor elsewhere. The period seemed impractical to define or measure, and so gave little predictive value. Joseph Schumpeter, a student of Boehm Bawerk who disagreed with him on this point, argued in 1911 that the period of production is zero; capital is present continuously. Frank Knight, who had anticipated Schultz in realizing that some consumption is investment in human capital, argued as Schumpeter had. But the theory is true by definition. Any rate is the inverse or reciprocal of a period. The inverse of 4% per year is 25 years. Return is the ratio of net output to capital producing it, meaning the rate of production, and its reciprocal is the period of Chapter 7 Petty’s Idea 2/3/16 12 HOUSE_OVERSIGHT_011071